Key questions and answers from the second quarter fiscal 2008 earnings call conducted by Blackboard, Inc. (BBBB: chart) on August 6, 2008.

Michael Nemeroff (Wedbush): I'm just trying to work through the guidance, especially on the bottom line. So the way I have calculated, there was the $0.04 increase on the higher end of the guidance range from Desire2Learn, $0.04 from tax. So essentially you are raising the high end of the guidance on the EPS by about a $0.01 or $0.02. Did I calculate that correctly?

Mike Beach: I think the impact of the Desire2Learn is going to be more than $0.04 on the full year. I think it is probably closer to six. However, yes, the tax on Desire2Learn numbers are generally in line with what we would calculate.

Michael Nemeroff (Wedbush): Then on the revenue that you did not get, the million in revenue from the delay in shipping the transaction, the new version of transaction. Is that revenue that is going to be able to be made up in future quarters? Or is that just roll off because it is ratable?

Mike Beach: We would expect to make that up in future periods. Unfortunately we have got a window of installations that occurs in the summer months. A big portion of that will push in to next year. So we will get that revenue. It is just that some of it will occur in the third and fourth quarter, large amount of that we will actually push into 2009.

Michael Nemeroff (Wedbush): You mentioned that the spending environment for academic institutions, you do not feel it as much as the normal enterprise software company. Can you compare what the pipeline looks like or looked like coming out of the User Conference this year than it did coming out of last year's conference? Could you give us some qualitative comments around that? Then also, in your conversation with customers, are any of them delaying purchases of any new modules in anticipation of Version 9?

Mike Chasen: We were extremely pleased with Blackboard World Conference this year. I think it was our strongest conference to date and we have the strongest pipeline coming from that conference. Generally the client comments to us on the improvements that we made in support, the enhancements to our managed hosting as well as the vision that we laid out there really was exciting.

We expect to have strong results for the rest of this year. I do think that what is reflective of the industry as is our high contract value number, and our larger revenue where we are continuing to see strong demand particularly for our products, and whether that is our e-Learning product or our new Blackboard Connect and Blackboard Transaction product, as well and we are continuing to increase our sales focus to make sure that we are getting this product out in the hands of the clients; and we are seeing a lot of success there with the cross selling.

Just a technical note to your comment about the next release of our software. All of our clients are on annual subscriptions, so they continue to upgrade and get all future releases of our software just as they are released to the public, so there is not any delayed reaction to purchase because of that, if anything it really gets people excited about the future direction that we are headed in as a company.

Michael Nemeroff (Wedbush): At the User Conference and analyst sessions, you talked about the dilemma of how you account for some of these statewide contracts and the number of absolute enterprise licenses that you will book. Can you tell us how you accounted for the State of New Mexico this quarter and how you plan on accounting for those statewide deals in the absolute enterprise count going forward?

Mike Beach: As it relates to the enterprise counts, currently New Mexico is included in the counts, just that the amount of clients that were previously using the product in New Mexico. When the system goes live which will be the end of this year, early next year, then we would be able to better determine the number of actual users of the system and that relates as well to the revenue recognition impact that we also will not be able to recognize revenue on this deal until the end of the year.

About a $1 million of services revenue that would have been recognized had it been another type of transaction will be pushed from this year into next year just related to services, but also the run rate of this contract which is about $2 million in product revenue, that will not begin until the system goes live .So we will get virtually no revenue recognition off the New Mexico deal, obviously have both selling and other upfront cost that we will incur this year and all the revenue benefit will begin next year.

Amy Junker (Robert Baird): About the two gains, just for purposes of modeling, if we wanted to strip those out what the after-tax amount of the $4 million gain that you got as well as the $3.3 million from D2L. Do you have that information?

Mike Beach: Yes, basically pretax income back out those gains and then apply the 35% effective rate that we applied that we had guided to, the impact of those items are going about $0.12 in the quarter.

Amy Junker (Robert Baird): Just to clarify, when you provided guidance for the second quarter in your last conference call, did that assume either the $4 million gain or the proceeds from the patent judgment?

Mike Beach: No.

Amy Junker (Robert Baird): Do you expect any more gains from the patent judgment or is that a one-time thing that should not continue going forward?

Mike Beach: Yes, we would not expect anything and it is not in guidance.

Amy Junker (Robert Baird): Talk about the announcement that you made with the plan to develop the Sakai Integration, what exactly do you hope to achieve with that announcement and can you talk a little bit on the timing?

Mike Chasen: At the Blackboard World, we talked about how in the future of our product and this is an issue we are actually working closely with a couple of universities on, that our learning system will be able to load other course management system courses through our interface. One of the issues they were having is a lot of campuses have standardized on the Blackboard system and we are the standard product for almost the entire campus, but there maybe an individual teacher or a very small department that is using either a home-grown system or maybe an open-source solution and then why really should the students or faculty members have to go to a separate url or a separate log-in to be able to access those courses.